The prospect of some of the world’s leading car rental companies going out of business has become very real amid the COVID-19 outbreak. With air travel at a near stand-still, vehicle rental operators have been hit hard and one of the largest is said to be one of the worst affected.

Hertz, a company in the car rental business for over 100 years, was struggling to make debt repayments at the end of April and made 10,000 of its 38,000 US workforce redundant earlier in the month. It has now been given a lifeline by creditors until May 22nd to allow, “discussions with the goal to develop a financing strategy and structure that better reflects the economic impact of the Covid-19 global pandemic and Hertz' ongoing operating and financing requirements."

In 2019 Hertz globally had record revenue of $9.8 billion, but posted a $58 million net loss. The pandemic has since had a massive impact on business activity with business from air travellers, normally two thirds of revenue, and accident repair replacement vehicle business almost totally disappearing.

Throughout the world Hertz has fleet of some 568,000 vehicles and there is now a major concern that if the company does fold, or significantly restructures, huge numbers of used vehicles could appear on the used car markets in all countries in which it operates. This would include Ireland, where it trades under its own name and the Dollar, Thrifty and Firefly brands. Hertz in particular may be badly exposed because it buys its vehicles outright and sells them on rather than entering a buy back agreement with car makers.

Other major market players are also struggling to cope with the crisis, with Avis for example reporting an 80% fall in business and Enterprise facing major issues as its owned fleet devalues as used car prices drop. Meanwhile European operators such as Sixt and Europcar are banking on huge bail out loans to survive. Europcar also has the protection of guaranteed buy back values from car makers.